Entrepreneurship and the road to Vision 2030

77 days ago

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Pablo Martin De Holan

By Pablo Martin De Holan, Ph.D.*

THE ambitious objectives of Vision 2030 require that Saudi Arabia unleashes its entrepreneurial potential and creates a large number of entrepreneurial firms in high value-added sectors, and for that is necessary to increase significantly the entrepreneurial activity in the Kingdom. In this document we highlight the two main areas where improvement can be made and explain why these are different and require different solutions.

Experience tells us that there are two ways to stimulate entrepreneurship at the national level, one that focuses on the intensity (quantity) of the entrepreneurial activity and the other one that improves mainly its quality. Both can, and should, be activated simultaneously, as together they maximize the impact of the entrepreneurial ecosystem in the country, making it grow well beyond its current state.

The first area of action revolves around the training of entrepreneurs, the creation of safe-spaces (such as incubators and accelerators) where entrepreneurs can minimize the cost of their mistakes and refine their value propositions until they are market ready, and the deployment of training programs for whoever wishes to attend: entrepreneurship grows in all kinds of places and to reach some of these places we need to offer training in different formats and with different contexts, adapted to the necessities of each group. Women do not encounter the same obstacles as men, and young people face different challenges than older persons, and so forth. Training programs designed with these population segments in mind and delivered by persons who understand both the entrepreneurial process and the realities of these groups are excellent mechanisms to improve the quality of their business ideas and their implementation plans.

Our college, Prince Mohammad Bin Salman College (MBSC) for Business & Entrepreneurship, was created with that objective in mind: we have entrepreneurship in our DNA, and we are training entrepreneurs who will contribute to transforming the economy of the Kingdom. This principle can be extended to everybody, ensuring that the training programs are abundant, and that they welcome not just highly motivated entrepreneurs, but also people who often do not consider entrepreneurial ideas, such as government employees, professionals (doctors, lawyers, architects...), women and even teenagers.

The core principle behind this idea is that often entrepreneurs fail because of their own mistakes, not because of the lack of market or because their idea is not good. This is so because the cost of failing can be quite high, preventing the entrepreneur from profiting from the lessons of his or her failure. Often entrepreneurs learn as they go along, but that works only if they can afford the cost of the lesson and of course it assumes they will still have resources to correct their mistake once they have realized they made one. We are suggesting then that by helping entrepreneurs learn from other people´s mistakes at a low cost, they will avoid these mistakes and increase their chances of success. Here, then, the idea is to make entrepreneurship better by improving the quality of the ideas being worked on by entrepreneurs.

The second area involves unleashing the entrepreneurial potential of the nation in a different way: the idea is to remove the barriers that prevent entrepreneurship from happening in the first place, changing also the processes and interactions that slow it down. This obviously increases the quantity of entrepreneurial initiatives, even if some or even most ideas will need considerable work before they can be launched.

Everything on this earth can be improved, and the ease to conduct entrepreneurship in Saudi Arabia is a good example: today, it is more laborious to be an entrepreneur in Saudi Arabia than it is on other countries, and some much-poorer nations are much more entrepreneur-friendly. Results from the Global Entrepreneurship Monitor (GEM), conducted by MBSC in collaboration with partner organizations, indicates that the Kingdom is not as attractive as other countries for entrepreneurs, and part of that has to do with the multiple interactions the entrepreneur has with the government, or, using the words of Vision 2030, the “tedious bureaucracy” that slows down entrepreneurs for no particular reason.

The core principle here is that many entrepreneurs, who would otherwise be able to launch successful and innovative firms, do not do so because they are discouraged by the paperwork or the complexity of the endeavor. It is important to notice that in contexts of free trade areas (such as the European Union and the GCC), discouraged entrepreneurs can also move to a neighboring country with a more entrepreneurship-friendly administration and conduct business from there, creating successful firms but in a different country.

This approach would have the positive effect of increasing both the quantity and the quality of entrepreneurial activities in the Kingdom. In the medium and long term, evidence indicates that success inspires others to succeed, and as soon as the first success stories become evident to all, they serve as an inspiration for other persons who would have not thought of entrepreneurship as their main economic activity.

Evidence from other nations strongly suggest that these two approaches can, and should, be implemented simultaneously for maximum impact. Based on our experience in other nations, we believe that increasing the efforts on these two areas will facilitate the emergence of a variety of firms that will help, one by one, transform the economy of the Kingdom of Saudi Arabia and allow the country to reach the goals outlined in Vision 2030.

* The writer is Vice-Dean of Academic Affairs and Professor of Management at Prince Mohammad Bin Salman College of Business & Entrepreneurship